Solar incentives–02

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING


A solar feed-in tariff is a rate paid for electricity fed back into the electricity grid from a designated renewable electricity generation source such as a rooftop solar panel system or wind turbine.

At present, feed-in tariff regulations for renewable energy exist within Australia and they are widely considered one of the most effective ways to increase solar energy uptake.

Is an income from a feed in tariff taxable?

At this point, there doesn’t appear to be any specific taxation legislation dealing with income derived from feed in tariffs. Whether it is assessable income depends on the income producing nature of the activity. If it can be demonstrated that the system was installed with a view to making a profit, then receipts under the feed in tariff would be considered assessable income while all expenses associated with the income generating activity would be deductible (eg depreciation).

In most cases, systems installed at domestic sites would not be taxable as they would be considered personal use / hobby (i.e. not in the nature of a business or profit making scheme). If the system is installed at a commercial site, it will most likely be considered taxable. However, system owners should consult their  accountant for advice or can also request a private ruling from the ATO. An example of an ATO private ruling result in relation to feed in tariffs can be viewed here

Feed in tariff income and social security

According to a  May 2010 announcement from Centrelink, feed in tariff credits where applied as a credit on an electricity account are not included in Centrelink’s income test for pensioners, but credits converted to cash payments such as a cheque or direct deposit will be.

The adjusted policy applies from 14 May 2010 and is relevant to not just pensions, but all Social Security income support payments such as NewStart. However, we are still unclear if this applies to payments such as Family Tax Allowance and Parenting Payments. We advise people who may be affected should consult with their local Centrelink Office.

Is GST payable on feed in tariff revenue?

Individuals will not need to pay/remit GST from their feed in tariff income. The reason being that selling electricity back to the utility providers is considered an enterprise but you need to receive $75k per annum from this source to be required to register for GST. However, businesses will need to pay/remit GST for their feed in tariff income.

Western Australia net feed in tariff

New systems connected under the State Government’s Renewable Energy Buyback Scheme receive  7.135c per kilowatt hour. However, Horizon Power has introduced area-specific solar feed-in tariffs. While owners of systems in some towns will receive a much higher rate, others will receive less.

Contact us now to get your FiT benefit!

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